VW says works council payments legal after offices raided by prosecutors

FRANKFURT -- Volkswagen Group said it obeyed the law in the payment of its works council chief, Bernd Osterloh, whose office was raided by prosecutors and tax authorities, along with those of the company's chairman, finance chief and head of personnel.

The raid was related to suspicions of overpayments and related tax evasion. That is because over-remuneration could result in overly high operating expenses and the payment of too little tax.

Both VW and the works council said on Wednesday they were confident that Osterloh's remuneration would be found to be compliant with the law. The works council said Osterloh himself was not the target of the investigation.

It was revealed earlier this year that German prosecutors were investigating current and former executives at Volkswagen on suspicion that they paid Osterloh an excessive salary. Osterloh told a newspaper at the time that his basic pay was around 200,000 euros ($237,000), and that bonuses had lifted it to a peak of 750,000 in one year.

In Germany, wasting corporate funds is legally a breach of fiduciary duty.

The investigation, which comes on top of various probes over VW's diesel-emissions cheating scandal, comes at a delicate time for Osterloh as it might taint his campaign to be re-elected early next year. Labor representatives have unusual sway at VW and Osterloh has been one of the most influential figures at the company over the past decade.